To make the thumbnail link to the post try:
return '<a class="post-thumbnail-link" href="'.get_permalink().'">'.get_the_post_thumbnail(NULL, 'thumbnail').'</a>' . $title;
The post title is usually wrapped in a h1 or h2 which is probably what is causing it to display on a new line instead of next to the thumbnail. You’ll need to adjust the CSS for the thumbnail to make them float next to each other.
Something like this in your style.css might work depending on your existing styling:
.post-thumbnail-link {
float:left;
}